1994 (9) TMI 324 - AT - VAT and Sales Tax

Issues Involved:
1. Entitlement to exemption from turnover tax for a small-scale industrial unit.
2. Validity of retrospective amendment omitting Section 6B(2)(e) of the Bengal Finance (Sales Tax) Act, 1941.
3. Applicability of the doctrine of promissory estoppel.
4. Applicability of the doctrine of legitimate expectation.
5. Constitutionality of turnover tax under Articles 14 and 19(1)(g) of the Constitution.
6. Validity of the orders of assessment and appellate orders.

Issue-wise Detailed Analysis:

1. Entitlement to Exemption from Turnover Tax for a Small-Scale Industrial Unit:
The primary issue was whether the small-scale industrial unit was entitled to exemption from turnover tax during the period of eligibility under rule 3(66) of the Bengal Sales Tax Rules, 1941. The Tribunal noted that the applicants were granted eligibility certificates for certain periods but not beyond March 31, 1982. Despite interim orders, the applicants were assessed for turnover tax for the periods in question. The Tribunal held that the applicants were not entitled to exemption from turnover tax based on the eligibility certificates, as the legislative amendments and judicial precedents did not support such exemption.

2. Validity of Retrospective Amendment Omitting Section 6B(2)(e) of the Bengal Finance (Sales Tax) Act, 1941:
The West Bengal Taxation Laws (Amendment) Act, 1987, omitted Section 6B(2)(e) with retrospective effect, impacting the exemption previously available. The Tribunal referred to prior decisions, including the Calcutta High Court's judgment in Century Spinning Mfg. Co. v. State of West Bengal and its own decision in Calcutta Oil Industries Limited, which upheld the validity of the amendment as clarificatory in nature. The Tribunal found no grounds to declare the retrospective amendment ultra vires or unconstitutional.

3. Applicability of the Doctrine of Promissory Estoppel:
The applicants argued that the doctrine of promissory estoppel should prevent the imposition of turnover tax based on prior assurances of tax exemption. The Tribunal rejected this argument, stating that promissory estoppel could not be invoked against legislative functions. The Tribunal found no evidence of any specific assurance by the government regarding exemption from turnover tax, thus negating the applicability of promissory estoppel.

4. Applicability of the Doctrine of Legitimate Expectation:
The applicants contended that they had a legitimate expectation of tax exemption based on the provisions of rule 3(66) and related notifications. The Tribunal noted the Supreme Court's stance that legitimate expectation does not invalidate legislation. It concluded that the applicants could not rely on this doctrine to avoid turnover tax, as the legislative amendments were clear and unambiguous.

5. Constitutionality of Turnover Tax under Articles 14 and 19(1)(g) of the Constitution:
The applicants challenged the turnover tax as violative of Articles 14 and 19(1)(g), arguing it was discriminatory and an unreasonable restriction on their right to trade. The Tribunal referred to the Calcutta High Court's decision in Century Spinning Mfg. Co., which upheld the constitutionality of Section 6B. The Tribunal reiterated that the imposition of turnover tax was not confiscatory and did not violate constitutional provisions.

6. Validity of the Orders of Assessment and Appellate Orders:
The applicants sought to quash the orders of assessment and appellate orders, arguing they were illegal and unconstitutional. The Tribunal found no merit in these arguments, holding that the assessments and appellate orders were in accordance with the law. The Tribunal dismissed the application, vacated the interim order, and upheld the validity of the assessments and appellate orders.

Conclusion:
The Tribunal dismissed the application, concluding that the applicants were not entitled to exemption from turnover tax, the retrospective amendment was valid, and the doctrines of promissory estoppel and legitimate expectation were inapplicable. The imposition of turnover tax was constitutional, and the orders of assessment and appellate orders were upheld.

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